From: dlucca@comcast.net
Sent: Friday, May 07, 2004 3:17 PM
To: rule-comments@sec.gov
Subject: File No. S7-11-04
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609
Dear Secretary Katz,
I am writing on behalf of our money management firm that serves almost 500
investors to oppose the proposed mandatory 2% redemption fee (File No.
S7-11-04) for mutual funds for the following reasons:
1. The proposed rules duplicate an option the funds already have at their
disposal. If a fund's managment senses any problem at their fund, they can
already choose to impose a redemption fee. Most funds obviously do not believe
there is a problem or they would have already availed themselves of this
option. To make it mandatory for all funds, even when there is no problem
present is not logical and only ends up hurting the little guy.
2. No objective study has been done that shows a systemic problem that this
proposed fee would solve.
3. The real problem that the rule attempts to solve is cause not by investor
behavior, but by failure at the fund management level to refresh prices.
Punishing the investor for the failure of mutual fund management is the wrong
approach. I suggest that the best solution is better standards that insist on
fair value pricing.
4. Finally, imposing further fees results in an investment "tax" on the small
investor - those most likely to use mutual funds.
Thank you for the opportunity to comment.
Sincerely,
David Lucca
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David A. Lucca
Rhoads Lucca Capital Management
120 North Pointe Blvd., Suite 302
Lancaster, PA 17601
717.569.8500 Office
dlucca@comcast.net